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How Much Longer Can Dairy Farmers Survive?

By Chris Kick
 
Dairy farmers know to expect years of low milk prices and big price swings. In the past decade, milk prices have swung from lows of $10 per hundred pounds, to record highs above $20.
 
The problem is when prices stay low, year after year, as they’re doing right now.
 
Over the past three years, the all-milk price has averaged below $18 per 100 pounds, the first time that’s happened since 2006, when feed costs began to rise. And, according to the latest market summary from the U.S. Department of Agriculture, based on January information, the all-milk price this year is forecast at $15.80-$16.60 per hundredweight.
 
“It’s pretty clear that we’ve got more producers on the ropes this year than we’ve seen in the last two to three years,” said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin.
 
Volatility continues
Dairy producers saw a good price in 2014, topping $20/hundredweight. But prices were much lower from 2015 through 2017, and 2018 is off to a rough start.
 
“We’re now going into the fourth year of these relatively low prices and we’re seeing substantial (carryover) declines,” Stephenson said.
 
The continued lows have farmers eating into their equity, and looking for any way they can to reduce inputs and increase their profit margin.
 
“Somehow, we’ve got to figure this out,” said Jim Rowe, a Tuscarawas County dairy farmer whose family operates Jimita Holsteins.
 
Rowe said there are ways producers can borrow more money, if they must. He said it’s important to keep paying businesses like veterinarians and dairy service providers, because “if the majority of their customers are dairy, they’re probably not in the greatest shape either.”
 
Keep the best
One of the biggest things a farmer can do, he said, is make sure you sell any cows that are underproducing, including those cows that have become “your pets.”
 
“This might be the time when we’ve got to be a cold-hearted cow culler,” he said.
 
But producers have to be careful not to cull too many cows, or they’ll hurt the future of their herd genetics, said Knox County dairyman Paul Haskins.
 
Another area producers can save is with equipment — fixing up what is broken and limiting new purchases.
 
“Things are tight and people are more in the mode of fixing stuff up instead of buying new,” said Haskins, who milks about 100 Holsteins near Butler, Ohio, and serves as the president of the Ohio Holstein Association.
 
Haskins said that each dairy farm’s situation is different, but what it all comes down to is being more efficient.
 
Dairy policy experts and farmers seem to agree that the over-arching problem is supply and demand. There’s simply more milk on the market than there is consumption.
 
Milk per cow
Over the past 10 years, per-cow production has increased by 1 to 2 percent a year, or about 13 percent across all 10 years, as a result of better genetics and cow management, according to USDA. For 2017, the average cow produced 22,938 pounds of milk.
 
“We continue to get more and more efficient at producing milk,” said Andrew Sandeen, a dairy educator with Penn State Extension.
 
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